"Unofficial margin accounts have 'significantly' higher leverage than those opened through brokerages and can invest in any stock, not just those mandated by the regulator."

'The outstanding balance of margin loans on the Shanghai and Shenzhen
bourses climbed to 4.4 percent of overall market capitalization on July 2
from 3.6 percent on June 12, before the rout began, as the attached
chart shows. The data doesn’t include unregulated borrowing, which Bocom
International Holdings Co. estimates at around $322 billion. That would
increase the debt to market cap ratio to more than 9 percent.

'Higher leverage may undermine government measures to stem the
steepest three-week rout in the nation’s equities in a quarter-century.
Margin traders reduced positions for nine days through Thursday, the
longest stretch of declines on record, even as the central bank cut
interest rates and the securities regulator eased margin-trading rules.

'The outstanding balance of margin loans on the Shanghai and Shenzhen
bourses has fallen by $46.1 billion to $319 billion through Thursday
from the peak on June 18, according to the latest exchange data. The 13
percent drop compares with a 31 percent, $3.2 trillion plunge in the
value of Chinese equities through Friday, as the attached chart shows.'